ISA mortgage

As well as paying interest to your lender, you also pay into a stocks and shares individual savings account, often known as an ISA mortgage, useful to build up enough money to pay off your mortgage at the end of your term.

The Advantages of an ISA.

1. ISAs are a tax efficient way in which to invest in shares, trusts, units and other investments, as they are all completely tax-free!
2. There are no restrictions when it comes to with drawing your money from your ISA account. So for example, if towards the end of your mortgage share prices are high, you could protect your investments by taking this money out and cashing it into a lower risk alternative.
3. You will need a vast amount of self discipline and determination to ensure you pay steadily and regularly into your account in order to build up the sum you need to repay your mortgage.

The Disadvantages of an ISA.

1. It is quite risky taking the option to invest in stocks and shares because the market is extremely difficult to judge. If the stock market falls, then so too will your ISA, so too will your investments.
2. You may wish to invest in a lower-risk investment such as a bond or preference share; however, it is doubtful whether the investments on their own will produce a big enough return to pay back your mortgage.